Correlation Between Air Transport and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Air Transport and AG Mortgage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Air Transport and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and AG Mortgage Investment, you can compare the effects of market volatilities on Air Transport and AG Mortgage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Air Transport with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and AG Mortgage.
Diversification Opportunities for Air Transport and AG Mortgage
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and MITP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and AG Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AG Mortgage Investment and Air Transport is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Air Transport Services are associated (or correlated) with AG Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AG Mortgage Investment has no effect on the direction of Air Transport i.e., Air Transport and AG Mortgage go up and down completely randomly.
Pair Corralation between Air Transport and AG Mortgage
Given the investment horizon of 90 days Air Transport Services is expected to generate 0.29 times more return on investment than AG Mortgage. However, Air Transport Services is 3.46 times less risky than AG Mortgage. It trades about 0.38 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.09 per unit of risk. If you would invest 2,199 in Air Transport Services on November 6, 2024 and sell it today you would earn a total of 26.00 from holding Air Transport Services or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Air Transport Services vs. AG Mortgage Investment
Performance |
| Timeline |
| Air Transport Services |
| AG Mortgage Investment |
Air Transport and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and AG Mortgage
The main advantage of trading using opposite Air Transport and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, AG Mortgage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AG Mortgage will offset losses from the drop in AG Mortgage's long position.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| AG Mortgage vs. Summit Materials | AG Mortgage vs. Mako Mining Corp | AG Mortgage vs. RTG Mining | AG Mortgage vs. Viemed Healthcare |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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